Bitcoin’s price concerns have risen after a federal Judge authorized Genesis to sell approximately $1.66 billion in assets last week. In a weekly report, Coinbase addressed these concerns by stating that the massive sale would most likely have a “neutral overall effect in the market”.
Coinbase remains optimistic about the crypto market after its own revenue went up 51% over the last quarter of 2023. This optimism, however, didn’t prevent the exchange from recently announcing changes to its Coinbase Commerce service. The changes include the removal of native Bitcoin support.
Time To Worry?
The assets Genesis was allowed to sell are 35.9 million shares of Grayscale Bitcoin Trust (GBTC), 8.7 million of Grayscale Ethereum Trust (ETHE), and 3.0 million of Grayscale Ethereum Classic Trust (ETCG). Whether the shares will be exchanged for their underlying assets or sold for cash to distribute to its creditors is still a matter of speculation.
Coinbase’s prediction of a “neutral overall effect” from the sale of GBTC, ETHE, and ETCG obeys its assertion that all of the assets will “remain within the crypto ecosystem”. This, combined with the momentum the cryptocurrency market is experiencing, would be enough to counterbalance the selling pressure.
What happens to these shares will be decided on February 26th, the date when the confirmation hearing is scheduled to take place. The hearing will decide whether Genesis’ debt repayment plan is a viable path forward or not, setting the stage for the next step in Genesis’ Chapter 11 process.
No More Support for Native Bitcoin
Coinbase Commerce’s decision to drop its support for native Bitcoin comes at a time when the cryptocurrency has gained 25% in value over the past month. The cryptocurrency has led a surge in activity in the crypto market, which has now surpassed the $2 trillion capitalization for the first time since May 2022.
Coinbase’s Head of Product Lauren Dowling referred to the drop of support as a “difficult decision”. According to Dowling, Bitcoin’s lack of stablecoins and smart contracts made it difficult to develop the same features the company offered through other networks.
1/ Hey folks, I’m the product lead for Coinbase Commerce and want to share some thoughts on how the product is evolving, why we’ve made these changes, and clarify what it means for our asset support strategy moving forward. ????
— Lauren Dowling (@Lauren_Dowling_) February 17, 2024
The drop of native Bitcoin support doesn’t mean customers will no longer be able to pay using the cryptocurrency. Any customer who owns a Coinbase account will be able to continue paying with Bitcoin, which Dowling said makes a “significant portion” of customers already using the service.
According to Dowling, the change will bring “higher conversion rates” and “less manual effort”, while also being well received by many merchants. They also reassured customers that the on-chain payment protocol “will remain open”, ensuring that tokens and networks not supported by it can still be used with the service.
Coinbase Is Finally Profitable
Despite being one of the biggest exchanges in the world and one of the few ones able to operate legally in the U.S., Coinbase has struggled to reach profitability for a while. This, however, changed during 2023 as the exchange posted its first profitable quarter since going public.
Coinbase CEO Brian Armstrong celebrated the good quarter by sharing some insights via X, formerly known as Twitter. Armstrong cited the $95 million in positive net income, the launch of the Coinbase International Exchange, new products like derivatives and Layer 2 Base, and its lobbying efforts to get Bitcoin ETFs approved, as major milestones.
Now that it is in “a strong financial position”, Coinbase will be focusing on “growing trading fee revenue” this year. To achieve that objective, the exchange will be expanding internationally and enhancing the utility of its payment solutions, as well as “developing Coinbase Wallet into an onchain superapp”.
Armstrong also reaffirmed his belief that Coinbase’s “long term focus on compliance” was one of the major drivers behind last year’s success. As such, the exchange will also be “driving regulatory clarity for crypto” in 2024 through its lobbying, legal, and standwithcrypto.org efforts.
